Zee-Sony merger: Axis Finance files plea in NCLAT against NCLT nod for deal

Axis Finance has on Thursday filed plea in National Company Law Appellate Tribunal (NCLAT) against National Company Law Tribunal (NCLT) nod for the mega Zee-Sony merger.

In a stock exchange filing, Zee Entertainment Enterprises Ltd said it "has been served with an appeal on behalf of Axis Finance Limited against the Company before the NCLAT, Delhi, challenging the order dated August 10, 2023 passed by NCLT, Mumbai Bench".

At 1405 hours on Thursday, Zee Entertainment's scrip on BSE was trading 1.6% lower at Rs 271.2.

Last month, the National Company Law Tribunal (NCLT) allowed the merger of Zee Entertainment Enterprises Ltd and Culver Max Entertainment (earlier known as Sony Pictures Networks India).

This order by the Mumbai bench, headed by H V Subba Rao and Madhu Sinha, will pave the way for the creation of a $10-billion media company, the biggest in the country.

In December 2021, Zee Entertainment and Sony Pictures agreed to merge their businesses.

Both media houses approached the tribunal for sanctioning the merger after obtaining permissions from National Stock Exchange, BSE and sectoral regulators such as the Competition Commission of India and the Securities and Exchange Board of India.

However, the process stopped at the tribunal when a few creditors raised objections. Several creditors of Essel Group raised objections against the non-compete clause added to the scheme.

NSE and BSE had informed the Mumbai bench of NCLT about two orders related to the Essel Group entities, where the promoters allegedly diverted funds from the listed entity for the benefit of their associate entities.

This also included the Securities Appellate Tribunal (SAT) order against Punit Goenka barring him from holding a directorial position in any listed company.

SAT upheld Sebi the Securities and Exchange Board of India's (Sebi's) interim order which restrained both Zee Entertainment promoters Subhash Chandra and Punit Goenka from holding board positions in public listed companies for a year on account of alleged fund diversion.

According to the creditors objecting to the merger, the order has a direct bearing as one of the integral parts of the scheme of merger is the appointment of Goenka as the Managing Director of the merged entity.

As there is a regulatory bar on Goenka holding such positions, the merger shouldn't go through, they submitted.

With inputs from PTI